Company car and the sõidupäevik in 2026: fringe benefit, kW-based tax, business-only use

For companies whose employees drive an employer's car, and for the accountants who keep the records. Current as of 2026.

An employer's passenger car — ametiauto in Estonian — is taxed on a completely different principle from a personal car whose use the employer reimburses. For a personal car, the sõidupäevik (mileage log) is the basis for money: without it there is no tax-free compensation. For a company car it is evidence: it brings in nothing, but it keeps the fringe-benefit tax away by showing that no private trips were made.

What follows: the two situations a company car can be in; how the fringe benefit is calculated from engine power; what it takes for a car to count as business-only; and what all of this does to VAT.

Two situations

There is no third, halfway option: the company decides per car, and everything else follows.

This guide covers passenger cars (M1); for other vehicles, such as vans (N1), the rules differ in part — check the EMTA handbook.

The fringe benefit price: 1.96 euros per kilowatt

Since 1 January 2018 the fringe benefit price has depended on neither mileage nor the number of private trips: the earlier flat 256 euros a month and the log-based per-kilometre calculation were replaced by a price tied to engine power (Income Tax Act, § 48 (8)). The rates in force in 2026:

The power figure comes from the traffic register, i.e. the registration certificate. For a hybrid, the basis is the maximum power of the combustion engine.

Two consequences surprise accountants most often:

• A mileage log does not reduce the tax. Since 2018 private trips can no longer be "deducted" on the strength of a log: if private use is allowed, what is taxed is power, not kilometres.
• The month does not split. If the car was available for private trips even for part of a month, the fringe benefit is calculated for the whole month — the law provides no pro rata.

Worked example: a 110 kW car

A car up to five years old:

• fringe benefit price: 110 × 1.96 = 215.60 € per month
• income tax: 215.60 × 22/78 = 60.81 €
• social tax: (215.60 + 60.81) × 33 % = 91.22 €
• total tax burden: 152.03 € per month, roughly 1824 € a year

The same car once it is over five years old:

• fringe benefit price: 110 × 1.47 = 161.70 € per month
• income tax 45.61 € + social tax 68.41 € = 114.02 € per month, roughly 1368 € a year

The employer pays the tax and declares it on annex 4 of form TSD under code 4040 by the 10th of the following month. Amounts are rounded to the cent; in 2026 the income tax rate is 22 % (applied to a fringe benefit through the 22/78 coefficient) and the social tax rate is 33 %.

Business-only: the register note and the evidence

The exemption is not the formality alone; it is the formality plus the facts:

1. A note in the traffic register. The employer notifies the Transport Administration (Transpordiamet) that the vehicle is used solely for work, professional or official duties; the simplest route is the Transpordiamet self-service, in the vehicle's own view. Without the note, the car is presumed available for private trips too, and the fringe benefit has to be declared.
2. Evidence that this is actually the case. The note alone is not a defence. EMTA's position is that no fringe benefit arises where it is proven that the employer permits the car to be used for business trips only, and the burden of proof lies with the employer.

In practice that evidence is a sõidupäevik, including an electronic or GPS-based one. Supporting facts help: a written car-use policy, the car parked on company premises outside working hours, and fuel-card statements that reconcile with the log.

What the log has to contain

There is no state-prescribed form for a company car's mileage log. Use the same fields the regulation prescribes for personal-car compensation — they are familiar to the tax administrator and cover an audit:

1. First and last name of the recipient of the compensation (for a company car: the person using the vehicle)
2. Make and registration number of the vehicle
3. Date, destination and purpose of each trip
4. Odometer reading — at the start and at the end of each trip

For a company car the fourth point matters most: the odometer chain must be unbroken. If the difference between the month's first and last reading exceeds the business trips recorded in the log, the gap is unexplained — and unexplained kilometres look like private trips in an audit.

VAT: 50 % or 100 %

On the acquisition of a passenger car and on the costs incurred for it, input VAT is as a rule deductible at 50 % — that is the share of business use the law assumes. 100 % is possible where the car is used exclusively for business (the exceptions in § 30 (4) of the VAT Act, which also cover resale, rental, taxi services and driving instruction).

Two time limits are worth remembering. If a car bought with a 100 % deduction is taken into private use, it counts as a partly business-used "50 % car" for at least one year (12 months); and when the VAT deducted on acquisition is adjusted, the car counts as a 50 % car for the first two years of use. In other words: 100 % input VAT and "I take it to the shop once a month" cannot coexist.

What Odoma Tracker does for a company car

Odoma Tracker keeps the log — it makes no tax decisions and does not replace an accountant. For a company car its role is exactly what proving business-only use requires:

1. Automatic trip recording — a trip starts and ends on its own, with no button to press, so no gaps appear in the log.
2. Business / personal classification — automatic from your schedule; any trip can be reclassified with one tap.
3. PDF export of the sõidupäevik with all the mandatory fields — for the accountant or the archive.
4. E-mail delivery straight from the app.
5. For companies — the Odoma dashboard. The logs of all company cars and drivers arrive in one place, with approval and an export for the accountant — see Odoma for business.

If the car carries the business-only note, the point of the app is that the entire distance is accounted for and the odometer chain runs unbroken from month to month.

FAQ

Is a mileage log mandatory for a company car? The law imposes no direct duty to keep one. If private use is allowed, the log adds nothing in tax terms — the fringe benefit is computed from engine power. If the car is marked business-only in the traffic register, the picture reverses: no fringe benefit arises only where business-only use is proven, and the burden of proof is on the employer. The sõidupäevik is the standard evidence.

Does a mileage log reduce the fringe benefit if there were only a few private trips? No. Since 1 January 2018 the fringe benefit price has been calculated from engine power (1.96 or 1.47 euros per kW per month) and does not depend on mileage; the option of accounting for private trips through a log disappeared on the same date. Where private use is allowed, the tax is the same for 50 private kilometres and for 5000.

What happens if one private trip is made in a business-only car? The register note does not grant an exemption by itself — it states an intention. If a private trip was in fact made, the fringe benefit for that month must be declared and paid, with no pro rata, because the month does not split. The input VAT needs a second look too, since the basis for the 100 % deduction has fallen away.

How is a car marked business-only in the traffic register? The employer notifies the Transport Administration, most conveniently through the self-service portal, where the note can be added in the vehicle's view. Without it, the tax administrator assumes the car is available for private trips and expects the fringe benefit to be declared.

Can 0.50 €/km compensation be paid on top for a company car? No. 0.50 euros per kilometre and 550 euros a month are the rates for compensating the use of a personal car, and they presuppose that the car does not belong to the employer. A company car's costs are borne by the employer anyway. The same person receives compensation only if they genuinely use their own car for work duties — see the sõidupäevik guide.

Sources

• EMTA — Tööandja sõiduauto (employer's passenger car, handbook)
• EMTA — Fringe benefits
• EMTA — Tax changes in 2026
• EMTA — Instructions for completing TSD annex 4 (code 4040)
• EMTA — Passenger cars and VAT accounting (the 50 % cap)
• Transpordiamet — other vehicle-related procedures (business-use note)
• Riigi Teataja — Tulumaksuseadus (Income Tax Act)
• Grant Thornton — the input VAT restriction on passenger cars
• Raamatupidaja.ee — car fringe benefits and mileage logs from 2018

Legal disclaimer

This document is prepared by Odoma Digipädevuse Selts (registry code 80659718) for general user information. It is not legal, accounting, or tax advice. Estonian tax regulation can change; for disputes or material questions, contact:

• Maksu- ja Tolliamet (EMTA) — the official regulator. Site: emta.ee, business-client hotline.
• A licensed accountant — for individual recommendations on your specific situation (fleet structure, VAT accounting, contested expenses).

Odoma Digipädevuse Selts assumes no responsibility for decisions made on the basis of this text.

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